Ask Rande 10,000+: Re: Re: Re: Definiton of a Bull Market ?

» Rande - Re: Re: Re: Definiton of a Bull Market ?

In response to message posted by DanG_6:

Also confirmed by a nearly 22% gain in the European Index since 9/21 as well, so not just the result of a fluke in the Dow. The true test, of course, will be no return to or movement beyond the 9/21 lows. The market does not need to reach old highs for a bull to commence. The broad definition requires only that the market cease to make new lows, with the technical measurement point at 20% from previous lows for a bull to be defined (or from previous high for a bear to be defined). Clearly, the only question left is one of sustainability which no one on earth will be able to answer with absolute certainty, except in retrospect.

One more point on the "20% rule." The past four years have been misleading at best in the context of traditional metrics. In the 1998-99 period we had a "stealth" bear market where most stocks were making new lows. It was only a handful that led the popular averages higher through March of 2000, when the averages stalled and then began their decline in the late summer/early fall. But since early 2000, we've had a "stealth" bull market where the broader issues have performed quite well, particular value in general and small/mid-caps in particular. It's been large-cap growth/tech -- the area responsible for the prior narrow run-up -- that has performed horribly. Secondary issues are not supposed to do well IN a bear market, but, rather, coming out. But the parabolic rise in 1999 (over 80% for the Nasdaq from October of 1999 through March of 2000 alone) was atypical to say the least, as were the events surrounding the market's action during that time. Remember, less than one dozen stocks accounted for half of the market's rise in 1999 and the same handful has accounted for half of the decline since. If anything, we are in a much healthier situation as excesses are worked through both in the market and the real economy.

-- posted by Rande